FBI, FDA and Inspector General Looking Into Puerto Rico Health Dept. Purchases

Fiscal board Requires Gov’t to Seek Reimbursements

SAN JUAN — Puerto Rico Health Secretary Lorenzo González Feliciano said Monday that federal agencies have asked him for information on emails related to purchase orders made during the coronavirus pandemic, thus confirming possible investigations into the mismanagement of public funds.

González Feliciano said that officials from the Federal Bureau of Investigation (FBI), the Food and Drug Administration (FDA) and the Office of the Inspector General requested that his department “safeguard email accounts.”

Among the issues that could be under investigation are either the discovery of warehouses with expired drugs or the $38 million order of one million rapid tests to detect the novel coronavirus disease (COVID-19), which were canceled due to not being approved by the FDA.

“They have asked…basically, the way they ask for information, what has been asked so far, is to safeguard email accounts. I assume they want to see the [conversations]. I have nothing else,” the official said in a Radio Isla interview.

González Feliciano said a total of 207,000 rapid tests to detect COVID-19 have arrived in the island, 200,000 of which were being picked up at the airport Monday to be distributed.

The purchase of the one million tests at a cost of $38 million, which was handled by construction industry companies Apex General Contractors and 313 LLC was canceled, and a refund was requested for the amount paid, which was half of the total cost of the tests.

The tests were acquired before González Feliciano was appointed Health secretary and while the purchasing process was being managed as per the recommendation of the Health task force appointed by the Vázquez and her assistants.

Gen. José Burgos, the commissioner of the Emergency Management Bureau, which processed the purchase of the million tests, said in a Radio Isla interview that Health Department Administrative Assistant Adil Rosa was who told him about the availability “of a million tests in Miami,” which “she said could be here in two or three days,” the official added.

When consulting with the FDA and U.S. Customs and Border Protection (CBP) to expedite their clearance, it was found that the test manufacturers in Australia were not on the FDA-approved list of companies.

It was at that time that it was determined to cancel the order and demand a refund, Burgos said.

According to reporting by Caribbean Business and El Nuevo Día, Apex General Contractors and 313 LLC, are related to the Lemus Group, connected to the top leadership of the majority New Progressive Party.

In a letter to the governor, the executive director of the financial management board that was federally established for the island, Natalie Jaresko recalled that on March 16, Executive Order No. 2020-24 was issued to establish special emergency procurement procedures to acquire products and material that the Health Department declares necessary in connection with the prevention of COVID-19.

The executive order, Jaresko said, requires that any contract “executed in accordance with said Executive Order must be submitted to the Oversight Board on the date of execution.” 

On March 25, Jaresko went on, “the Government also issued Executive Order No. 2020-27, which exempts the Executive Branch from the requirements of government contracting processes to enable and accelerate the recovery of Puerto Rico. Executive Order No. 2020-27 repealed and substituted Executive Order no. 2020-010 to include requirements that addressed some concerns the Oversight Board had presented. 

“As you know, the Oversight Board established and maintains a contract review policy pursuant to Section 204(b)(2) of PROMESA [Puerto Rico Oversight, Management, and Economic Stability Act] to require Oversight Board prior approval of certain contracts to assure that they ‘promote market competition’ and ‘are not inconsistent with the approved fiscal plan’ (the ‘Policy’). All government contracts and amendments thereto with an aggregate value of $10 million or more are subject to Oversight Board prior approval pursuant to the Policy. 

“Despite all of the above, the Government did not submit the agreements to purchase the aforementioned rapid testing kits to the Oversight Board. The fact that the Oversight Board allowed the use of the emergency fund without prior approval, does not mean that purchases made in response to the emergency with those funds can be made without complying with the corresponding due process consistent with fiscal governance, accountability, and internal controls. These elements of the procurement process are particularly critical during a state of emergency to ensure that critical resources are used efficiently and effectively. This state of emergency does not present grounds to disregard fiscal governance, accountability, and internal controls. Rather, it is especially during such times that the Government must continue to adhere to such principles to build and maintain confidence of all the stakeholders in the Commonwealth. 

‘The agreements at issue appear to not comply with PROMESA and the processes by which they were procured do not appear consistent with internal controls, efficiency, and fiscal responsibility benchmarks that must guide the Government’s procurement of products and services during the state of emergency. Entering into these agreements as above-described, without consideration of applicable processes or of basic procurement good practices, is unacceptable. Further, a legal analysis of the agreements in question may conclude that the same are null and void from inception. As such, these agreements should be canceled, provided they have not been already, and you should seek immediate reimbursement of all public funds disbursed in connection thereto. Please confirm, by April 8, 2020, that the Government has canceled these agreements and that the corresponding public funds have been reimbursed to the emergency fund. 

González Feliciano said that nearly 5,000 tests have been administered to date in Puerto Rico between rapid tests and the so-called PCR (polymerase chain reaction) tests, but to have an adequate epidemiological picture to show accurate approximations of how the novel coronavirus is spreading on the island, some 21,000 tests should be administered.

As of Monday, the number of positive cases in Puerto Rico had risen by 21, for 513 confirmed cases, 15 were processed in the Public Health Laboratory and six in the VA Hospital. A total of 4,951 COVID-19 tests have already been administered on the island, of which 3,432 have been negative and the results of some 1,000 are still awaited.

Twenty people have died of the disease.




Puerto Rico Treasury Cracking Down On Establishments Violating Lockdown Order

(Photo by Roberto Carlos Roman on Unsplash)

Suspends Alcohol License of Businesses in Caguas, Bayamón, San Juan

SAN JUAN – The Puerto Rico Treasury Department is cracking down on commercial establishments that are violating the government’s lockdown order mandating the closing of non-essential businesses that encourage gatherings such as bars and pubs to curb the spread of Covid-19.

Treasury Secretary Francisco Parés Alicea said in a press release that as of Friday his agency had suspended the internal revenue alcoholic beverage licenses of establishments in Caguas, Bayamón and San Juan for opening their doors to patrons, in violation of Gov. Wanda Vázquez’s March 15 and March 30 executive orders establishing a curfew/lockdown on the island.

Executive Order 2020-23, issued March 15, implemented a curfew/lockdown order lasting until March 30, when the governor issued Executive Order 2020-29 to extend the novel coronavirus emergency measures through April 12.

Treasury suspended on Friday the liquor licenses of Colmado Delicias Inc. on Georgetti Street in Caguas, and of Cafetín Puntito 22, in Urbanización Valencia Z32, Ave. Orquídea of Bayamón. On March 24, the agency suspended the license of Prime Sport Bar in San Juan’s Condado community.

Parés said that the agency had sent suspension notices to these businesses before making the determinations final. In the case of Prime Sport Bar, the agency also confiscated the establishment’s alcoholic beverages after it continued operating despite the suspension order.

“We regret that despite the work and orientation that the different components of the government and the private sector are doing to control the Covid-19 epidemic, some irresponsible people insist on violating orders prohibiting the operation of businesses that encourage the meeting of citizens,” he said. “These people are jeopardizing the health of those who visit their businesses, their family members and themselves. Worse yet, their actions set back the advances in the efforts against infection that are carried out every day.”

Parés called on the public to report businesses that violate the curfew/lockdown through “Suri Confidencia” at Treasury’s online internal revenue system (SURI by its Spanish acronym) or website (www.suri.hacienda.pr.gov), or through the agency’s social media. He said that Section 6023.03 of the 2011 Internal Revenue Code, as amended, confers upon the Treasury secretary the power to revoke or suspend alcoholic beverage licenses in possession of business owners who “violate established regulations and norms established by the Secretary or [for] any other reasonable or justifiable cause after hearing out the person concerned.”

Executive Order 2020-29, which establishes a 7 p.m. to 5 a.m. curfew, mandates the closure of shopping centers, movie theaters, dance clubs, concert halls, theaters, game rooms, casinos, theme parks, gymnasiums, bars or any similar place or event where people could gather.

The Treasury internal revenue license suspension is for a six-month period, according to internal revenue regulations, which add that any suspension, as well as any related summons, will be notified through SURI. Any business owner who receives a notice of suspension may request a reconsideration hearing by filing, through SURI, an administrative complaint with the Treasury Department’s Office of Administrative Appeals within 30 days after the date of the suspension notice, according to the Uniform Administrative Procedure Act of 2017 (Act 38).

Since the curfew/lockdown was implemented March 15, Treasury personnel have inspected 9,055 commercial establishments as of Thursday, Parés said.

 “We have 300 Internal Revenue agents on the streets and we will not hesitate to continue suspending licenses. This is about saving lives…,” the official said, adding that his department is no longer giving out warnings and is now suspending licenses on the first offense.




Puerto Rico Retailers Group Calls for ‘Indefinite Exemption’ of Cabotage Law

(Screen capture of www.centrounido.com)

Argues Jones Act Poses a Threat to Island’s Food, Medication and Supply Security Amid Pandemic

SAN JUAN — A Puerto Rico industry group, the United Retailers Center (CUD by its Spanish acronym) called on Gov. Wanda Vázquez Garced to urgently request the federal government, “specifically President Donald J. Trump, to issue the order to indefinitely exempt the island from the cabotage, or coastwise trade, law, known as the Jones Act.

“Amid the pandemic that is affecting the world economy, Puerto Rico suffers from the aggravating circumstance of remaining under cabotage laws, threatening the health of our country, since it will make all the products that reach Puerto Rico by sea, which is practically all of them, more expensive. We have spent years advocating for the end of these federal provisions that force Puerto Rico to use the United States merchant marine exclusively and what is being promoted is to produce transportation options to lower costs,” said Dr. Jorge Argüelles, president of the CUD.

“At this point in the 21st century, no one should oppose that. Every Puerto Rican family can feel the effect of the increase in the cost of both the basic [food] basket and the limitation on products for their health and safety. The United States today is suffering the pandemic emergency and it can barely produce what is necessary for the health of citizens who live there. Therefore, we will suffer that chain effect here due to cabotage laws,” added Argüelles.

The executive stressed that Puerto Rico needs to acquire medical equipment and medications, as well as other essential products.

“We are facing an emergency that has already [infected] a million…and it would be a crime to have to overpay to buy what is needed, in addition to not knowing whether [the supplies ordered] will arrive. If anyone had doubts about the importance of requesting exemption from the laws cabotage, this is the moment of truth. We do not want to run into a worse crisis in a few days,” said Argüelles.

The administrative exemption requested from Trump would be granted under current laws, “amid the imminent need for security (46 U.S.C. § 501 (b))” of the millions of people in Puerto Rico, “as was done” during Hurricane Maria. For this emergency, the CUD argued, the exemption “must be indefinite” due to the ever-changing developments related to the pandemic, “apart from the fact that transportation by American ships is 151% more expensive,” the group said.

The CUD also pointed to a letter from the Department of Justice regarding the “potential to create a monopoly, were the merger” between Tote Maritime and Empresas Luis Ayala Colón “to be completed, which would give them control of the ports and possibly the price” of merchandise.

“We must add the risk factor to the monopoly they seek here. Almost everything enters through a single port, which could well be closed by COVID-19. It is necessary to prevent the concentration of these two companies that have more than 80% and one already reported yesterday employees testing positive to the virus. Let’s take the pertinent measures to avoid worse consequences while being able to take action in time,” Argüelles concluded.




Municipality of San Juan Extends Cancellation of Activities Through May

San Juan Mayor Carmen Yulín Cruz (Cybernews)

Mayor Based Decision on Health Secretary’s Remarks About Peak Infection Period

SAN JUAN — The mayor of San Juan, Carmen Yulín Cruz, announced on Friday that as part of the measures to protect citizens, all cultural, sports and educational activities in that municipality will be canceled until May 30.

The mayor justified the action by referring to statements made by Health Secretary Lorenzo González, who said the peak period of COVID-19 in Puerto Rico, according to the existing data to date, could extend from April 15 to May 8.

“This implies the total closure of the Tapia Theater, the Hiram Bithorn Sports Complex, the Roberto Clemente Coliseum, the Luis Muñoz Marín Park, and all sports facilities, the 39 sports training centers and the Cangrejitos. We know the impact that these measures have, but it is much more important to save lives and minimize the impact of contagion in San Juan and Puerto Rico,” Cruz said in a press release.

Although González has been indicating for several days that the information gathered thus far indicates that the peak of the outbreak would last until the first week of May, in a televised program originated by WIPR, he reiterated the statement with the members of the COVID-19 Task Force.

Likewise, the mayor indicated that “the tourist information offices in Old San Juan and the Tourism Office located in the Mayor’s Office will remain closed until May 30.” This includes the Casa Rosada and the tourist information kiosk in the Plaza de La Barandilla.

Cruz added that the drive-thru for COVID-19 testing continues to offer its services to patients who call 939-COVID-19.

“I urge the residents of San Juan to stay at home following all the recommendations to prevent infection and comply with the curfew to save lives, which is what all these efforts are about,” Cruz said.




Production ‘Explodes’ at Puerto Rico-based Disinfectant-maker

(Screen capture of www.prsbtdc.org)

Pandemic-triggered Demand Forcing Gascó Industrial to Find New Raw Material Sources

SAN JUAN – One of the leading manufacturers in Puerto Rico has ramped up production of much-needed hand sanitizer, detergent and disinfectants amid the Covid-19 pandemic, despite increasing problems with the accessibility of raw material.

Dan Bigman Montalvo, CEO of Gascó Industrial, which makes environmentally friendly detergents, disinfectants and pesticides for industrial and retail use, said production at the company’s Gurabo plant had to be increased three-fold in the last few weeks to meet burgeoning demand due to the novel coronavirus emergency.

The company specifically hiked production of alcohol-based hand sanitizers, antibacterial soap and various disinfectants, all of which are in demand during the current crisis, he said.

“This has been an explosion for us during the past few weeks, receiving constant calls and emails from many people and companies, including multinationals that need our products to continue functioning,” Bigman told Caribbean Business. “We have sold to pharmaceutical and medical device companies such as Amgen and Medtronic. We have had to quickly increase our manufacturing capacity. We are working as quickly as possible, from 5 a.m. to 10 p.m., Monday through Saturday.”

While Gov. Wanda Vázquez’s March 15 executive order mandated the closing of non-essential businesses on the island, manufacturing facilities were allowed to continue operating during the curfew/lockdown, which the governor extended to April 12.

Gascó’s sales, which average about $3 million a year, have shot up tenfold, Bigman said.

“Now we are selling about a million dollars a week. We have never had an experience like this,” he said, noting that the plant has had to hire more workers and add another shift. “We had a spike in sales during the [influenza] A(H1N1) pandemic [in 2009], but the sales increase then was just 10 percent of the increase we are having now with the coronavirus. After Hurricane Maria, there was also an increase in sales but small compared to this.”

Clients have helped Gascó manage the abrupt increase in production by loaning it packaging equipment and making payments in advance for ordered products, Bigman said, adding that this has allowed the company to have enough cash flow to continue buying raw materials such as alcohol. Orders for hand sanitizer, soap and disinfectants have also been coming in from new overseas clients, from such locations as St. Thomas, Panama and Mexico, he said, noting that these clients got wind of Gascó products through online referrals, particularly on Facebook.

Nonetheless, Bigman said Gascó is giving priority to customers in the health industry and the essential businesses that remain open in Puerto Rico, “so they can continue working.” He said the company started preparing for the effects of the pandemic in mid-February, when he started hearing about “the virus getting out of control in China.”

“We began to make plans and we had meetings with our employees to see if we needed to stock up. We gave out bottles of hand sanitizer and disinfectant to our employees to use in their homes. We gave them talks about the disease and the symptoms,” the University of Puerto Rico doctoral chemistry graduate said. “Up until now, thank God, no one has been affected. We are cleaning [the plant] twice as much as we did before, including the door knobs. We have something like an internal lockdown and meet with visitors and clients in the parking lot under a tent. We have other employees working remotely from their homes.”

Safety protocol

Despite not having any symptoms, a plant employee who returned from a trip to North Carolina was sent home for a quarantine period as a preventive measure, Bigman said, noting that the action responded to “our understanding that there a number of people who may have the virus but are asymptomatic.” He said he was told that Covid-19 testing would be administered only to people with symptoms due to the limited number of tests.

While Bigman said the company stocked up with raw materials in February in anticipation of supply chain complications due to the pandemic, he added that in the past few days “the logistics have become a little complicated.”

“The process of entering materials to the island through the airports and the ports is much slower, about two or three days slower than usual,” he said. “In the United States there is a shortage of raw materials. Luckily, we were a little prepared and we had stocked up on alcohol and other materials, but we did not expect [the shortage] to be so great.”

Gascó has had to look for new sources of raw materials outside of the United States, in countries such as Panama, Bigman said. Such a change in suppliers “complicates things a little” for the company, he stressed, due to the fact that its products are regulated by the Food & Drug Administration and are registered with the Environmental Protection Agency.

Bigman said the company is working with Ponce-based Serrallés distillery to obtain the alcohol needed for its hand sanitizer product. He said that in the current crisis companies like his have an urgent need for liquidity and not tax credits.

“As part of the Puerto Rico Manufacturing Association board, I am worried that government measures can take too long to implement,” he said about the recently implemented local and federal rescue packages for businesses affected by the pandemic.

Originally an export firm established in the 1980s in a Bayamón carport by Bigman Montalvo’s Spanish-born father and Dominican Republic-born mother, Gascó Industrial normally produces and distributes food service confections, industrial cleaning and disinfectant products, as well as pesticide mostly for use in cafeterias and restaurants. After his father died three years ago and he took over as CEO, Bigman Montalvo aimed to expand company sales by producing non-toxic cleaners and environmentally safe pesticides, relying on the “green chemistry” he learned while earning his Ph.D. in chemistry from the University of Puerto Rico.

He was featured in Caribbean Business’ 2018 40-Under-40 edition.




AbbVie Donates $35 Million for COVID-19 Relief

(Screen capture of www.abbviecontractmfg.com)

Offers 2-for-1 Matching for Employee Donations, Resources for Assistance

SAN JUAN — Biopharmaceutical company AbbVie has announced a donation of $35 million to support COVID-19 relief efforts. In the United States, AbbVie’s funds will be used to support healthcare capacity for hospitals as well as protect vulnerable populations by enabling access to food and essential supplies. In Europe, the donation will provide critical equipment and supplies to patients and front-line healthcare workers in the hardest-hit countries.

“AbbVie is making this donation to nonprofit partners that will have an immediate and significant positive impact in communities that have been hit hardest by this unprecedented crisis,” Richard A. Gonzalez, AbbVie’s chairman and chief executive officer, said in the announcement press release. “Our 30,000 AbbVie team members around the world are proud to be able to help make a difference in the fight against this virus.”

International Medical Corps – Immediate Hospital Support for U.S. Hotspots

AbbVie’s donation to International Medical Corps will support increased healthcare capacity at overwhelmed hospital emergency departments in the United States, where International Medical Corps is deploying 20 mobile field hospitals to help increase surge capacity at overburdened hospitals. These mobile field units enable hospitals to expand the available triage and treatment space at existing facilities, improve patient flow and keep COVID-19 patients separated from other patients.

AbbVie is the sole donor funding the procurement of the tents, equipment, supplies as well as all of the operating expenses for these field hospitals through the end of 2020. AbbVie launched International Medical Corps’ response in cities across the United States, including Boston, Chicago, Cleveland, Detroit, Los Angeles, New Orleans and New York, as well as in Puerto Rico, where the drugmaker has facilities in Barceloneta for drug finishing and biologics development. 

“Each field hospital includes the equipment, personnel and resources to effectively provide urgent or outpatient care to hundreds of patients per day, including patient beds, medical examination supplies, portable sinks, power, lighting and HVAC units,” the release explains. “The field hospital can be stood up in approximately six hours and withstand 80-mph sustained winds. International Medical Corps will pull from its roster of nearly 300 medical professionals to fill critical gaps in nursing and infection prevention and control. Each hospital will determine specifically how it intends to use the additional space and resources.”

AbbVie’s “extraordinary and swift support means that health workers on the frontlines of the COVID-19 pandemic in the U.S. will have more resources to save lives in the fight against this dangerous disease,” said Nancy Aossey, president and CEO of International Medical Corps. “I’d like to thank AbbVie for always standing with us — and for helping to make sure that we are first there, no matter where, in fighting outbreaks of infectious disease in the U.S. and globally.”

Direct Relief – Providing Equipment and Supplies in Europe  

AbbVie is donating to Direct Relief to provide equipment and supplies in the hardest-hit European countries. Direct Relief is procuring and delivering personal protective equipment (PPE) for front line healthcare workers as well as oxygen concentrators and ventilators for patients. This equipment is critical as hospitals work to manage high patient demands and limited beds, particularly in intensive care units.

“Direct Relief is so deeply grateful for the leadership and commitment reflected by AbbVie’s action today, which is keenly needed, will be put to immediate use, and is a perfect example of what’s needed as we all face this historic threat to the health of people everywhere,” said Thomas Tighe, Direct Relief president and CEO.

Feeding America – Protecting Vulnerable Populations and Communities

Feeding America is the largest domestic hunger-relief organization in the United States and serves most vulnerable populations, including seniors.

“AbbVie’s support means more people in need will benefit from Feeding America’s services, which include food and essential supplies. As people continue to be under stay-at-home orders or are otherwise confined to home, Feeding America food banks are launching creative new delivery methods, including direct-to-home food drops and minimal-contact food pick-ups,” the release reads.

“We are incredibly grateful for AbbVie’s generous commitment to Feeding America’s COVID-19 Response Fund. During this unprecedented time, the Feeding America nationwide network of 200 food banks is working tirelessly to provide food and emergency assistance to children, seniors and families struggling with food insecurity and people experiencing job disruptions,” said Claire Babineaux-Fontenot, CEO of Feeding America.

AbbVie Community Resilience Fund – Setting Aside Funds for Future Needs

As part of its $35 million commitment, AbbVie is designating up to $5 million in reserve funding for additional near-term commitments to help address the COVID-19 pandemic.

“With the situation rapidly evolving, AbbVie seeks to ensure flexibility in its donation program as funds emerge and new areas of need are identified. To that end, AbbVie is creating the Community Resilience Fund, which will provide funding to organizations improving community resilience in under-resourced areas impacted by the COVID-19 pandemic. Learn more and apply here,” the company wrote.

Various Charities – ‘Empower Employee Giving

AbbVie also announced that it is doubling the AbbVie Foundation match for COVID-19-related contributions by its employees. Through this program, AbbVie “seeks to increase the impact the company can make on this crisis. Instead of the typical 1:1 match, the AbbVie Foundation will match $2 to every $1 employees donate to a nonprofit for this purpose. In 2019, the company’s employee giving and matching program raised more than $13 million for charities,” the company recalled.

AbbVie Employee Assistance Fund – Supporting Employees in Need

For employees impacted by the COVID-19 pandemic, AbbVie is offering support through the AbbVie Employee Assistance Fund’s Employee Relief Program.

“Employees in need of assistance can apply for this program, which covers expenses such as mortgage/rent payments, utilities, food, childcare and medical expenses by going to AbbVie.com/EAF,” the company said.

The company has created a website related to its response to COVID-19, AbbVie.com/coronavirus. 




Business Continuity a Big Challenge in Covid-19 Times

Entrepreneurs Need to Focus on Emerging Opportunities to Stay Afloat, BDO Analyst Says

SAN JUAN – Even the best business continuity plans in Puerto Rico—for those who have them—have been put to the test by the Covid-19 pandemic. Yet, business owners can still keep their enterprises afloat by reorganizing operations to take advantage of emerging needs and opportunities in the current emergency, a business continuity expert assures.

Aida Escribano, a partner at the BDO Puerto Rico accounting and auditing firm, told Caribbean Business that not only must business owners remain focused on stabilizing and keeping their companies running, but they should also set up task force teams of key employees and consultants to seek out financing and market opportunities during the crisis.

Escribano said BDO has launched a microsite/blog to address Covid-19 challenges and financing opportunities: https://pr-www.bdo.global. She will hold the first in a series of webinars, titled “Strategies to Increase Cash Flow: Understanding the CARES Act Related to SBA Loans.” Thursday, April 2’s webinar starts at 3 p.m. For more information, visit https://pr-www.bdo.global.

One of the key aims of this task force, Escribano explained, should be “reimagining” or “reinventing” the purpose of a given business in times of the novel coronavirus, which has upended daily life on the island and throughout the world.

The curfew/lockdown executive order implemented by Gov. Wanda Vázquez March 15, which has been extended to April 13, mandates the closing of most non-essential businesses while allowing essential businesses in the health, food, banking and manufacturing sectors to remain open, albeit for limited hours.

“We had Hurricane Maria, the earthquakes and now the coronavirus. Every day, throughout the world, there are different risks,” Escribano said, adding that such risks include critical customer and vendor losses, loan defaults, cyberattacks and internet outages. “There are many businesses that came out better prepared after Hurricane Maria, but many more did not anticipate the type of crisis we have now. Maybe many have generators in case the power goes out and are aligned to what we are accustomed to which are hurricanes. But, unfortunately, for this situation they are not prepared.”

Escribano said that the level of preparedness to face certain risks and identify opportunities determines the ability to maintain a business running, adding that business owners “must be proactive not reactive.”

The certified public accountant said business owners often get bogged down in “little problems and details” when complications arise due to lack of preparedness, and lose focus of the “big picture.” A business disruption, even as severe as the current one, can be “turned from a threat to an opportunity,” she said, adding, “This is where an action plan comes in.”

“Sometimes business owners do not know where to start and get lost in the details. But they should think holistically,” she said. “Managing the crisis should not fall on just one employee, but groups of employees dealing with the different fronts in the battle to get things under control.”

Escribano said that in the current crisis the use of technology is vital to continue operating a business virtually. Many businesses can have their employees work remotely from their homes—as was the case in the aftermath of hurricanes Irma and Maria in 2017. Applications such as Microsoft Teams, Zoom and Skype allow companies to set up face-to-face virtual meetings with clients, she said.

“What we most learned from the hurricane process was the great importance of working remotely, above all when offices were destroyed and records could not be accessed. We learned that we needed information redundancy,” she said, noting that cloud technology—both internal and external—allows the storing of data that can be accessible remotely. In the process of keeping a business viable, such data are needed to monitor progress and make operational and strategic decisions, she added.

“The business owner should create task force teams to tackle the different fronts in these situations, such as communication with your employees, communication with your clients and communication with the community. These communications must be aligned. This is the most important step at the beginning of the process,” she said. “You should use technology to always be in contact with your clients. We should never lose that connection because that is what maintains the sense of normalcy.”

A focus on need

Escribano, who is also a certified insolvency and restructuring accountant, said that businesses need to repurpose themselves during the pandemic to stay afloat. She pointed out how locally based rum producers Bacardi and Serrallés are producing ethanol alcohol to make hand sanitizer, which is in short supply, for hospitals and other healthcare centers in the fight against Covid-19. Local startups such as LabbGo are filling the need for Covid-19 testing at individual homes instead of having patients risk infection by visiting clinical labs.

Gov. Vázquez has also allowed other businesses such as hardware stores and automobile parts and repair services to reopen during certain hours and days of the week, but can only serve customers with appointments.

“These are good examples from the perspective of restructuring in business development. This is reimagining your business, because with the crisis there is opportunity,” she said. “You need to reorganize your business so that you can put these ideas to work in your new strategy. You need all of the pieces of the puzzle to fall in place so this strategy works.”

Escribano acknowledged that this “reimagining” of a business is easier for some given the nature of the crisis.

“Many of them offer essential services and have continued their business,” she said, noting that many of the business continuity clients BDO is working with during the outbreak are in distribution and manufacturing. She declined to give specific examples, citing client confidentiality. “I have many clients who are reevaluating their strategies and have not made an announcement, yet.”

Documentation is key

Escribano said these emergency business restructurings have to deal with many challenges such as having employees get to a place where they will have contact with each other, or having to hire employees to address an increase in sales.

As the economy sinks, the biggest challenge businesses on the island are facing is obtaining the financing and cash flow needed to continue operating. The Vázquez administration announced last week a series of economic relief measures to aid businesses affected by the lockdown closures. Moreover, President Trump signed into law last week the $2.2 trillion Coronavirus Aid, Relief & Economic Security Act (CARES Act), which provides billions of dollars in rescue funds to businesses.

However, Escribano cautioned that business owners must have their paperwork and a plan in place to take advantage of these opportunities. She said many companies must keep their financial records in order to qualify for loans and credit lines.

“There are many things happening in terms of incentives, credits and restructuring of loans. There will be a series of opportunities,” she said. “But how fast can we react to those opportunities if we are not prepared for them? If you are going to present a proposal for financing you need to rely on information to present projections.”




FEMA: Over $123 Million Obligated for 346 Projects during March

Including 279 projects for municipalities

SAN JUAN – As the Federal Emergency Management Agency (FEMA) and Puerto Rico’s Central Office of Recovery, Reconstruction and Resilience, or COR3, continue recovery efforts, the agency said Tuesday that “an unprecedented” 346 projects were approved during March. These projects represent $123.9 million in funds for recovery work related to hurricane María.  

FEMA works with COR3 through the agency’s Public Assistance program to obligate recovery funds to private nonprofit organizations, municipalities and agencies of the Government of Puerto Rico for expenses related to hurricanes Irma and María.

Between March 20 and March 26, the agency obligated an additional $62.8 million in funds for 67 projects.

The latest grants obligated are as follows:

  • Over $52.6 million for repairs to parks and recreational facilities.
  • Over $3.7 million for repairs to public buildings and equipment.
  • Nearly $4 million for repairs to roads and bridges.
  • Over $2.5 million for emergency protective measures.
  • Over $71,500 for debris removal.

“Our staff on the island are your neighbors, your brothers and sisters and your friends. Puerto Rico’s recovery is their top priority. This historic number of project obligations is proof of our ongoing commitment, in spite of the many challenges along the way. Each of us is doing our part to make sure the jewel of the Caribbean shines once again,” said newly named Federal Disaster Recovery Coordinator for Puerto Rico and the U.S. Virgin Islands, Alex Amparo.

“Right now, as we are in the middle of recovering from an unprecedented disaster and those recovery efforts are ongoing, facing new situations has led to more effective communication and coordination between COR3 and FEMA. By the same token, both teams have put alternatives in place to increase and accelerate the approval of funds for these projects,” said COR3’s executive director, Ottmar Chávez Piñero.

Part of the funds approved for parks and recreational facilities include over $51 million for the Puerto Rico Department of Sports and Recreation. About $48 million will go to 191 different parks and recreational facilities across 45 municipalities.

“This $48 million obligation is the result of two years of joint efforts between the municipalities, COR3 and FEMA to develop a way to group multiple facilities that require less complex construction in order to accelerate the claims and disbursement of funds process. With this, by way of a unique process, we were able to include 191 facilities in the claims process and, with this, we will be able to initiate the procurement process and subsequent construction of all the structures simultaneously,” said the secretary of the Puerto Rico Department of Sports and Recreation, Adriana Sánchez Parés.

In addition, another $3.4 million was approved to restore the Fuentes Pinete Park in Loíza. This facility includes a baseball field, a basketball court and other areas that sustained damage. Repairs include work on the light poles, interior lighting and other electric components.  

Other obligations include about $1.7 million to restore Barceloneta’s municipal building, over $88,000 to repair a bridge in the Pelegrín Santos sector in Cidra and roughly $62,000 for repairs to the Department of Agriculture building in Maricao.

To date, over $6.5 billion has been approved for Puerto Rico under FEMA’s Public Assistance program.




SBA, Treasury Begin to Distribute Coronavirus Bill Funds

U.S. Treasury Department building in Washington, D.C. (F U M A on VisualHunt.com)

$349 Billion in Emergency Small Business Capital Cleared

SAN JUAN – Following the enactment of the Coronavirus Aid, Relief and Economic Security (CARES) Act, SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin announced Tuesday that the SBA and Treasury Department have initiated a “robust mobilization effort” of banks and other lending institutions to provide small businesses with the “capital they need” as the coronavirus epidemic prompts social distancing across the United States.

The CARES Act establishes a new $349 billion Paycheck Protection Program to “provide much-needed relief to millions of small businesses so they can sustain their businesses and keep their workers employed,” the agencies said in a press release.

“This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly. Our goal is to position lenders as the single point-of-contact for small businesses – the application, loan processing, and disbursement of funds will all be administered at the community level,” said Carranza. “Speed is the operative word; applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans. We remain committed to supporting our nation’s more than 30 million small businesses and their employees, so that they can continue to be the fuel for our nation’s economic engine.”

The legislation provides small business job retention loans to provide eight weeks of payroll “and certain overhead to keep workers employed,” said Mnuchin. “Treasury and the Small Business Administration expect to have this program up and running by April 3rd so that businesses can go to a participating SBA 7(a) lender, bank, or credit union, apply for a loan, and be approved on the same day.  The loans will be forgiven as long as the funds are used to keep employees on the payroll and for certain other expenses.”

The new loan program will help small businesses with their payroll and other business operating expenses. It will provide capital to businesses without collateral requirements, personal guarantees, or SBA fees – “all with a 100% guarantee from SBA.”

All loan payments will be deferred for six months. Most importantly, the SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.

The loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30.

Loan Terms & Conditions

  • Eligible businesses: All businesses, including non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries
  • Maximum loan amount up to $10 million
  • Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)
  • All loans under this program will have the following identical features:
    • Interest rate of 0.5%
    • Maturity of 2 years
    • First payment deferred for six months
    • 100% guarantee by SBA
    • No collateral
    • No personal guarantees
    • No borrower or lender fees payable to SBA

In the release, the SBA recalls that, since March 17, it has declared all states and territories eligible for Economic Injury Disaster Loan assistance; provided a one-year deferment on Economic Injury Disaster Loans provided due to the 2019 novel coronavirus disease (COVID-19); established an automatic deferment of previous disaster loans for homeowners and businesses through 2020; and waived garnishments through 2020.

Visit SBA.gov/Coronavirus for more information.




Puerto Rico to Receive Federal Emergency Unemployment Funding

(Screen capture of www.trabajo.pr.gov)

Weekly Payments to Increase by $600 for 4 Months; Benefits Extended to Dec. 31

SAN JUAN – Puerto Rico Labor Secretary Briseida Torres Reyes announced Monday the signing of an agreement with the U.S. Labor Department to allow the availability on the island of emergency unemployment benefits contemplated in the federal Families First Coronavirus Response Act to deal with the Covid-19 emergency.

As of Monday, the Puerto Rico Labor Department had received 76,928 new unemployment claims since March 16.

Torres said that all that remains to be done is for the federal government to establish the guidelines and processes for the implementation of the benefits, to make them effective and available to workers in Puerto Rico.

Among the legislated benefits is the possibility that self-employed workers could apply for unemployment and an increase in the weekly amount in unemployment benefits eligible employees could receive.  

“These new benefits will enable us to be able to address the totality of workers that require the services of the unemployment program, including independent contractors and the self-employed, which usually are not covered by this program,” the Labor secretary said about the aid included in the Coronavirus Aid, Relief & Economic Security Act (CARES Act) enacted last week. “[They] also cover existing beneficiaries who were about to exhaust their benefits and who may receive an extension of these.”

Among the new unemployment benefits for Puerto Rico is an increase in weekly payments to eligible workers, which will increase by $600 in the next four months, rising from the current $190 to a maximum of $790 a week. Moreover, the federal legislation increases the period for unemployment benefits by 13 weeks, from the current 26 weeks to 31 weeks, until Dec. 31, 2020.

Torres stressed the importance of the creation of the Pandemic Unemployment Assistance Program, which will allow the granting of the same benefits to self-employed workers who request it, and who are not eligible for unemployment benefits in the commonwealth program.  

“The program covers employees of insured employers and, therefore, self-employed workers are not eligible,” she said. “But in the face of this emergency, and it has occurred in other situations such as hurricanes and earthquakes, the federal government has extended the benefits to independent contractors and the self-employed, to help them face the lack of income from their jobs during this period, and whose benefits will be similar to those established for the regular program while the situation lasts.”

The unemployment insurance program is available to all employees, whether full-time or part-time, who work for insured employers that are registered with the Puerto Rico Labor & Human Resources Department. This insurance is triggered when these workers’ income is affected involuntarily, and they do not receive leave compensation and payments. Moreover, employees who continue to render services remotely and getting paid for it, are not eligible for unemployment.